MCA issued a notification
in June 2015 regarding applicability of a few sections and filing of forms with
MCA in respect of Board Resolution and Shareholder Resolutions U/s 117
“Resolution & Agreements To Be Filed”. The private companies shall take
the benefit of exceptions, modifications, exclusions and exemptions as given by
MCA but shall also protect the interest of their share holders.
There are 15 exemptions available
to Private Companies but not to private
companies which are subsidiary of public companies whether listed or unlisted.
Exemptions
to Private Companies:
1.
Private companies can enter
transaction with Related Parties. Related
Party Transaction shall not apply to transactions between a holding,
subsidiary or an associate company of such company
2.
MOA and AOA provisions shall
override the provisions of Companies Act with
respect to Kinds of Capital and Voting Rights
3. Provisions
with respect to further increase of issued share capital by Right Issue and
ESOS will not be applicable to Private Companies. ESOS
can be approved by way of an Ordinary Resolution instead of Special Resolution.
4.
Restriction on purchase of its own share by a private company or giving
loan to purchase its shares shall not apply a private company if all the conditions given below are
fulfilled:
- No other Body Corporate has
invested in its Share Capital
- Borrowing from bank is less than
the lower of the two i.e 50 crores or twice of its paid up capital
-
Company has not defaulted in repayment
of such borrowings
5.
Private company is exempted from the
provisions of Section 73(2) a to Section 73(2) (e) regarding prohibition on
acceptance of deposit from its members equal to Paid up Share Capital and free
reserves but DPT -3 is to be filed with MCA
6.
Provisions with respect to provisions
under Section 101 to Section 107 and Section 109 will be governed by the
articles and In case, there are no provisions related to section 101 to 107
& 109 in the Article, then provisions mentioned in the Act shall be applicable.
These provisions are related to Shorter Notice, Explanatory Statement, Quorum
of the meeting, Chairman of the meeting, Proxies, restrictions on Voting Rights
whether by Show of hand or demand of Poll.
7. Private
companies are not required to file MGT-14 for reporting the transactions
covered under 117(3) of meetings of board and its powers with MCA..
8.
OPC, Dormant Companies, Small
Companies and Private Companies with share capital less than Rs.100 Crore are
exempted from the provisions of Section 141(3) regarding eligibility,
qualification, disqualification and number of audits. That means audit of such
companies will not be counted in the maximum limit of twenty.
9.
Section 160 and Section 152 related to
the right of a person other than retiring director who is not a retiring
director in terms of section 152 shall, subject to the provisions of this Act,
be eligible for appointment to the office of a director at any general meeting
subject to certain conditions and there are restrictions on certain rights of
such director. Such provisions are not applicable on Private Companies.
10. Section 162 which provides for appointment of
directors to be voted individually at general meeting is not applicable on
private companies and a private company can appoint more than one director by
passing single resolution.
11. Section 180 is not applicable on private companies
which restrict certain powers of the board only subject to approval by general
body.
12. Section
184 which provides restriction participation in resolution for entering into
transactions with the company or wherever interested and disclosure of such interest
is not applicable on private companies. Now director of a private company may
participate in the meeting where a contract or arrangement is to be discussed
and after disclosure such director is going to be interested in transaction
with the company.
13. Section 185 restricting loan to director is
not applicable on private company now even all the conditions are fulfilled as
mentioned :
- No other Body Corporate has
invested in its Share Capital
- Borrowing from bank is less than
the lower of the two i.e 50 crores or twice of its paid up capital
-
Company has not defaulted in repayment
of such borrowings
14. Section
188 regarding related party transactions is not applicable to a Private Company
and member of a private company can participate in voting for resolution
approving the contract or arrangement wherein such member is interested .
15. Section 196 regarding appointment of managing
director, whole time director or key managerial person is not applicable to a
private company so shareholder’s approval for such appointment and filing of
MR-1 are not mandatory to be filed.
